Understanding the headlines about UK property prices

Have you ever read an article with a headline such as “UK property price growth slows” which leaves you with a distinctly negative flavour before you even read the article? However, upon further investigation how can it be negative that UK property prices are still expected to grow even during the so-called Brexit uncertainty? Somehow so-called “experts” on the UK property market seem to be able to spin a more positive angle into a negative story. The impact this can have on investor sentiment often leads to a self-fulfilling prophecy.

Growth is growth

Sit back and consider the negative headlines surrounding the UK property market and then think of which property market around the world would like to be in the same situation as the UK. At a time when the European market is still struggling, even the US is unable to pull away from benign growth but somehow the UK maintaining a positive price performance is seen as negative?

True, the current rate of growth of UK property prices is less than we have become accustomed to in recent times but it is still growth and growth in real terms. When you also factor in the relatively high rental yields available in many parts of the UK, why are observers so negative?

Is there a political bias in the media?

Many people were surprised when the UK electorate voted in favour of Brexit, bringing to an end the U.K.’s active role within the European Union. The vast majority of the mass media were in favour of retaining European Union membership and as such we have seen some extremely negative and damaging headlines. As the UK property market has perhaps the most direct impact upon the electorate, it seems as though negative assessment of the UK property market has become common practice.

We even have the governor of the Bank of England, Mark Carney, effectively talking down the UK economy rather than highlighting any positives in relation to the Brexit vote. While he obviously has an obligation to be realistic and have in place failsafe measures, is he really helping UK economy and the UK property market with his recent comments?

Sentiment changes, prices remain steady

Aside from the London property market, which often bears the brunt of short-term changes in sentiment and economic outlook, UK property prices have remained fairly stable. Indeed the number of estate agent expecting UK property prices to rise over the next year has increased significantly after a recent fall in confidence. The only real danger at the moment is “talking ourselves into a recession” which would be wrong and is indeed self-defeating.

On the plus side, this often unwarranted scepticism and concern about the UK economy and the UK property market in the short term could create a number of long-term buying opportunities. If you keep your eye on the longer term outlook, the UK economy could take a short-term hit but longer term has solid foundations, the UK employment market will continue to improve and demand for property is still showing long-term growth. It all sounds very simple but very often when you are bombarded with negative comments and negative sentiment it is difficult to see the wood for the trees.